Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 The Board of Management present their report and the audited financial ststements for the year ended 31 March 2023 of Connswater Homes Limited (the "Association"). This report is also known as the Trustees, report for Charity law purposes. Principal activities The Association is an Industrial and Provident Society and is registered with the Department for Communities I"DfC") providing housing accommodation for those in need. It has charitable status wilh HM Revenue and Customs and is a registered charity with the Charity Commission for Northern Ireland. Board of Management The Board of ftAanagement meets regularly throughout the year. There are also various committees who meet regularly throughout the year. The Committees have responsibility for development, housing management, maintenance and audit. Financial matters are reported directly to the Board. The Board carries out an annual appraisal of its own performance and an annual appraisal of individual of individual Board Members. The Board of Management are the directors of the company and are the trustees of the charity. The Board of Management, who served the Association during the year, and up to the date of signing the financial stalemenls, were: Mr Robbie Davis (Chairman} Dr Sara Templar (Vice Chairman) Mr Alan Hill (Honorary Secretary) Mr Michael Graham (Honorary Treasurer) Ms Kelly Andrews Mrs Nicola Barber Mr John Beattie Professor Paddy Gray Mr Trevor Hampton Mr Alex Ward Page 2
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Performance for the year ended 31 March 2023 During the year the number of homes in ownership increased to 1,205 from 1,175 at the end of Ihe prior year representing a 2.60A increase in stock size for the Association. Turnover increased by 3.8 % from £8,243,854 in 2021122 to £8,555,856 in 2022123. This increase is as a result of new homes added to the Association's stock during the year. An average annual inflationary rent increase of 2.380/0 on much of our existing stock also helped to boost turnover. Operating costs of £6,188,080 represent 72ts/0 of turnover {2022= 730A). The Association generated a surplus for the year of £1,212,402 giving a net margin of 14/0 (2022.. 120/0), which is better than both sector average and the performance of the Association over the past two years. The Association continuously invests in the maintenance of our existing stock of properties. ensuring our homes remain in great condition. To this end £912.010 was spent on planned maintenance (including capital) during the year. These works included 4 heating upgrades, 23 loft insulations, 60 window and door replacements, 3 kitchen replacements and 2 complete property refurbishments as well as internal redecoration to the communal areas of 2 apartment schemes. A programme of health and safety inspections was also completed including boiler seNicing, smoke and carbon monoxide alams testing. asbestos monitoring. legionella testing and fire risk assessments. The Board has a set number of key perfomiance indicators monitoring the operations of the Association on regular basis. Performance Indicator Actual 22123 Target 22123
850/0 Emergency repairs carried out within 24 hours Urgent repairs carried out within 4 days Routine repairs carried out within 28 days Operating margin Net margin Gearing ratio Interest cover ratio 890 800/0 870 800/0 30% 10°/0 380/0 <60'/ts Net debt per unit Voids as a 0/0 of Stock £29.949 0.8. <£38,000 Board members attendance at Board meetings 93.25°/0 75% Housing management staff assisted tenants struggling on low incomes by offering welfare and general money management advice, including assistance with universal credit applications. Page 3
Connswater Homes Limited Annual report and Financial ststements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Expected performance in the year ending 31 Mar¢h 2024 The Association expects to maintain its level of operations and performance in 2023124. It is planned that 114 homes will be added to the development programme during the year made up of a number of schemes. We expect there will be approximately 59 properties completed from existing schemes on sile and added to management during the year with the remainder completing in the years ending 31 March 2025 and 2028. A cyclical and planned maintenance programme of approximately £1.1m of investment has been approved. This includes 5 heating upgrades, 50 window and door replacements, 6 complete property refurbishments, 15 HRU IEnvirovent replacements. fixed wire testing at 400 properties and all health and safety inspections. Corporate Governance In the opinion of the Board of Management, the Associalion is in compliance with the Best Practice issued by the NHF Code of Governance and wrth the Dfc Regulatory Standards. Corporate Strategy The Association launched a new strategic plan in April 2022 covering the ftve year period 2022 to 2027. Our business goals over this period fuS on working logether and recognising diversity.. striving to be more environmentally aware throughout our business and activities., promoting kindness, resilience and community cohesion,. being open and clear in our actions, rectifying mistakes and doing what we say we will do,. connecting with tenants, engaging with stakeholders and buddying up with others to improve our seNices. We wll be working on these goals in a tough financial environment under the burden of welfare reform, political uncertainty and economic recovery following a global pandemic. It has never been more important to make sure value for money is embedded in our business,. to offer services that our tenants actualty need and to look at the wider picture of challenging poverty. improving health and well-being and promoting inclusivity. Our strategy to achieve this is to help our tenants to live in warm, safe, affordable homes,. to provide added value through community initiatives, customer led service provision and reducing our negative impact on the environment and by being a viable. forward thinking, environmentally aware business. We want to see houses become homes" safe and well-maintained homes that complement their environment. We want to help our tenants to live comfortably in these homes, so making them more energy efficient and affordable is very important. We also aim to deliver excellence aGross our core housing service activities such as routine repairs, investing in planned maintenance, rent collection and peaceful living. Whilst striving for continuous improvement and service development we will be inclusive anij mindful of the needs of our lenants. Our development priorities will be to not only provide new affordable homes in thoughtfully designed developments that will stand the test of time, but also lo consider alternative models for their delivery and tenure. We will have an active asset management and investment strategy to maintain our homes. We will continue to enhance our customer engagement opportunities through collaborative partnership with tenants and key stakeholders as we work to innovate in delivery of services. Page 4
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Through information and practice we want to gel invoEved in the sustainability agenda as we provide homes, enhance neighbourhoods and operate our business. Our tenants and employees will be encouraged to get involved in our efforts to reduce our carbon footprint. We will signpost our tenants to fuel poverty initiatives and offer welfare benefit advice. We want lo be a great employer and an employer of choice. It is our people who make us great, they determine how we perform as an organisation and we wanl to empower them to be the best they can. We want to develop a staff team with skills, knowledge and molivalion to deliver our goals. We want our team to feel valued and listened to., to provide them with a working environment that is agile and safe and to ensure they have resources to perfomi at their best. As an organisation, we will meet, or exceed statutory and legal requirements, apply appropriate risk controls, develop and comply with inlernal policies and apply innovative thinking to develop service efficiencies and deliver excellent customer focused services. Our business activities are underpinned by sustainability, regulation and collaborative working. We will assess a range of factors to ensure positive outcomes for all parts of our business including financial viability, value for money and environmental sustainability. We will raise staff awareness of energy efficiency and how to pass benefits on to tenants. Digital transformation has never been more important and Connswater recognises that it is business critical. We will ensure that the appropriate infrastructure, applicalions and systems are available in order for staff to deliver services in an efficient, consistent and cost-effective manner whilst ensuring clear and transparent governance. We will focus on improving cuslomer access to services and data. This will be driven further by developing our tenant portal and improving access lo equipmenl for tenants through our tablet loan scheme. Going Concern After making enquiries, the Board of Management have a reasonable expectation that the Association has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. Page 5
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Value for Money Our strategy at Connswater Homes Limited is to operate our core activities as efficiently and effectively as possible. We strive to improve the quality of our setvices to our tenants, continue building high quality homes and generate social value whenever we see the opportunity. VFM Fram8woth - 3 E's The Association strives to achieve Value (i.e. be as effective as possible) for the money that is invested in the activities that we carry out. We measure our VFM using a framework which examines our perfomiance in terms of Economy, Efficiency and Effectiveness. Treasury Management Policy The Association's aim is to maintain loan balances at a level to support development while keeping loan interest charges to a minimum. This is achieved without comprising the Association's ability to meet its financial obligalions at they fall due. Financial Risk Management Page 6
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 The Association's operations expose it to a variety of financial risks that include the effects of changes in credit risk, price risk and interest rate risk. The Association has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the Association by regular review of activity levels against changing market conditions and adjustment to cashflow projections accordingly. The Association liaises with lenders on an ongoing basis to keep up to date with other products in the marketplace. Interesl rate risk Exposure to fluctuating interest rates is managed by the composition of a balanced portfolio bebNeen fixed rate and variable rate loans. The Association's effective interest rate in 2022123 was 3.070/0. For the past number of years the Association's effective interest rate has been falling year on year as the Association agreed competitive terms on new loans. We recognise that we now find ourselves in a Ghanged economic environment and that any new loans drawn down in future years are likely to be at considerably higher Interest rates. This will cause our effective interest rate to increase in future years. Higher interest rates will put a squeeze on Net Margins in years to come and our development plans will need to take account of this higher interest rate environment to ensure bank covenants are met. The Association runs stress testing scenarios each year to ensure our future plans are viable and we amend our plans where necessary. Liquidity risk The Association maintains a mixture of long-temi and short-term loan finance that is designed to ensure there is sufficient funds to achieve business objectives and to facilitate planned growth. Currency risk The Association does not engage in foreign currency transaclions and so is not exposed to exchange risk Page 7
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Regulation The Association's principal regulator is the Department for Communities {DfCI. Their regulatory judgement for the year 2020121 gave the Association the highest rating of Level 1 assessing the 3 standards.. Governance, Finance and Consumer. As a registered charity the Association is also subject to regulation by the Charity Commission for Northern Ireland. Environmental matters The Association recognises its corporate responsibility to carry out its operations and development programme whilst minimising environmental impacts. The Board's continued aim is to comply with all applicable environmental legislation, prevent pollution and reduce waste wherever possible. Internal Financial Control The Board of Management is responsible for estsblishing and overseeing a risk management framework in order to safeguard the assets of the Association and for the Association's systems of internal financial control and along with senior management is responsible for establishing and operating detailed control and report procedures. The systems of internal financial control can provide over reasonable. and not absolute, assurance against material misstatement and loss. The Board of Managemenl have reviewed the effectiveness of the Association's system of internal financial control. The review included consideration of the business risks facing the Association and of the existing internal financial control procedures. The key elements of the control system in operation are: The Board has adopted a formal schedule of matters reseNed for its approval ensuring it maintains responsibility for overall strategy, approval of all property transactions and other major capital expenditure projects. There is an organisation structure with clearly defined lines of responsibility and delegation of authority. Detailed budgets are prepared covering the Association's businesses which are reviewed and approved by the Board. Actual results are compared against budget and appropriate action identified and initiated. The Audit Committee review matters relating to internal control and receives reports on a regular basis from the external and internal auditors and from senior management. Page 8
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Statement of the Board's responsibilities in respect of the financial statements The Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 and Registered Housing Association legislation require the members of the Board of Management to prepare the financial statements for each financial year which give a true and fair view of the state of the Association's affairs and of its surplus or deficit for that period. In preparing these statements the Board is required to= select suitable accounting policies and apply them consistently., make judgements and estimates that are reasonable and prudent., stale whether applicable accounting standards have been followed, subject to any malerial departures disclosed and explained in the financial statements., and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Association will continue to operate. The members of the Board of Management are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and to enable them lo ensure Ihat the financial statements comply with the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 and the Registered Housing Associations {Accounling Requirements) Order {Northern Ireland) 1963. They have general responsibility for the taking of reasonable steps to safeguard the assets of the Association and to prevent and detect fraud and olher irregularities. Events after the Balance Sheet date The Association has no post balance sheet date events to disclose. Charitable donations Donations tolalling £3,555 (2022: £2,595) were made by the Association during the year. No donations for political purposes were made during the year (2022.. £nil). Financial sustainability The Association has a robust framework of longer term financial planning in place. The Board regularly considers the longer term financial plan which covers a 30 year period. The financial plan is prepared in accordance with FRS102 using Brixx planning software. The Association remains profitable for each of the 30 years in the plan and both gross margin and net margin remain strong. Sensitivity analysis is carried out to see how the Association would cope financially under the following four stress factors- voids increase by 10A.. bad debts increase by 1 %, CPI increases by 10/0 and interest rates increase by 10A. In addition. to reflect the current economic environment, further stress testing was undertaken to assess the impact of 20/0 increases in CPI and interest rales.This allows the Board to consider whether the Association may need to amend or postpone future development plans should any of the above scenarios materialise. Page 9
Connswater Homes Limited Annual report and Financial statements for the year ended 31 March 2023 Report of the Board of Management for the Year Ended 31 March 2023 Statement of disclosure of information to auditors So far as each of the members of the Board of Management at the date of approval of these financial statements is aware.. there is no relevant audit information of which the Association's auditors are unaware. and that each Board member has taken all the steps that ought to have have been taken as a Board member in order to be aware of any relevant audit information and to establish that the Association's auditors are aware of that information. Independent Auditor3 The auditors, RBCA Limited, have indicated their willingness to continue in office, and a resolution proposing their reappointment will be proposed at the Annual General Meeting. Approved and authorised by the Board on . 73 and signed on its behalf by: r Alan Hill {Honorary Secretary) Mr Michael Graham (Honorary Treasurer) Page 10